IBM had lost the Project MAC contract to GE, leading to the development of Multics.
He decided to proceed with his own plan to build a timesharing system, with Bob Creasy leading what became known as the CP-40 Project.
“I launched the effort between Xmas 1964 and year’s end, after making the decision while on an MTA bus from Arlington to Cambridge.
Although they knew that with a bit of work they would be able to run any of IBM's S/360 operating systems in a virtual machine, as contented users of CTSS they also knew that they wouldn't be satisfied using any of the available systems for their own development work or for the Center's other time-sharing requirements.
Rasmussen, therefore, set up another small group under Creasy to build CMS (which was then called the “Cambridge Monitor System”).